While debt consolidation loans can be used to consolidate various types of personal debt, the most common use is for credit card debt.
As a student loan lender, we get a lot of great questions about how student loans affect credit score. The answer depends on whether you’re talking about federal or private student loans.
Federal loans don’t take credit scores into account, which is why every borrower gets the same interest rate regardless of financial profile.
If you’re in a low-paying job with a high amount of student loan debt, this could hurt your credit.
Student loans can also negatively affect your credit if you have a high balance that isn’t budging or, with interest, possibly even growing.
If you are concerned about your credit scores, you can always check on them with the three major credit reporting agencies.
Before you do that, ask for a copy of your credit report from each of them.
According to Federal law, you are allowed a free copy from these agencies each year.
If there is information that is false, misleading or happened over a decade ago, then you need to look into having it changed or deleted as soon as you can.
Since Federal loans cannot be used for housing or transportation costs, the inability to get a private loan can still prevent some students from attending college.
Applicants for Federal loans should also keep in mind that even with a good credit score, a bankruptcy that was applied for within 90 days of filing a FAFSA application will result in it being rejected.
Your payment history is 35% of what makes up your credit score, according to FICO, so late payments won’t look good.